Activist group doubles Clariant stake as it seeks to stop merger
Corvex and allies oppose plan to combine Swiss chemicals group with US rival Huntsman
An activist investor group that includes Keith Meister’s Corvex hedge fund has increased its stake in Swiss chemicals group Clariant to 15.1 per cent and repeated demands that it drop a planned $20bn tie-up with Huntsman Corp of the US.
White Tale Holdings, which is composed of Corvex and a fund called 40 North, made the declaration in an open letter to Clariant on Tuesday that reiterated claims that the proposed all-stock merger had “no strategic merit”, would destroy shareholder value and significantly undervalued the Swiss company.
“As you know, we have attempted to work constructively with you and your advisers over the past two months, out of the public spotlight, to better understand the board’s questionable logic in pursuing Clariant’s proposed merger with [Huntsman],” the letter to Clariant’s board said. “Unfortunately, we remain convinced, and increasingly so, that the proposed merger is detrimental to Clariant shareholders.”
The move marked the latest attack by the shareholder group, which is now the largest investor in Clariant. It began its public campaign in July when it disclosed a 7.2 per cent holding.
Clariant needs to win approval of the deal from two-thirds of those shareholders who attend a general meeting, which is expected to be held in the coming months. Given that not all shareholders attend such meetings, White Tale could seek to block a deal if it accumulates a sufficient amount of shares itself or convinces enough of Clariant’s other holders to also oppose the transaction.
One analyst following the situation closely said that the activist group has had trouble in finding support for its campaign from other Clariant shareholders and has been forced to increased its stake to keep any hopes alive of blocking the deal, which was announced in May. This person added that White Tale had failed to put forward any viable alternatives for Clariant in lieu of the merger, which has blunted the power of its argument.
Several European investors have told the Financial Times that they would prefer to see Clariant acquired at a premium by a rival such as Germany’s Evonik and that they are not convinced that the deal has much industrial logic. But they added that they did not think Clariant’s management would be open to a takeover and that the White Tale campaign had not gained much traction in recent months.
Earlier this month, Peter Huntsman, the US group’s founder, told the Swiss newspaper NZZ am Sonntag that he had met between 150 and 200 Clariant shareholders. “The large majority are behind us,” he said.
In its letter, White Tale claimed the Huntsman deal would mark a shift in strategy and lead Clariant to change from a pure-play specialty chemicals company to an “unfocused and commodity-oriented business with increased volatility and a lower market multiple”.
It alleged that Clariant’s board has not “seriously explored alternative measures or transactions to maximise shareholder value in advance of agreeing to merge with Huntsman”.
White Tale also argued that much of the synergies from a Huntsman deal could be achieved through a “robust cost optimisation plan” at Clariant without having to give almost half of that value to Huntsman shareholders.
Clariant’s shares, which have risen 42 per cent over the past year, were up a further 0.4 per cent at SFr23.89 by lunchtime in Europe on Friday.